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Insurance offered through OnPay Insurance Agency, LLC (CA License #0L29422)
Updated: October 4, 2023
When you think about it, Virginia could technically be considered as the small business that kickstarted the big business of the United States of America. And as we all know from history books, the founding of Jamestown was no walk in the park. While the first settlers had to deal with the troubles of…you know…settling, you as a small business owner have your own troubles and triumphs. That’s what we’re here for. We want to help you check payroll taxes off your to-do list.
Our handy payroll tax calculator is all you need. Just enter income and W-4 information for each employee, and the calculator will take care of the rest.
Federal payroll taxes Virginia employers should know
First things first, we have to pay the federal government. Whether your employees are hourly or on salary, all federal taxes remain the same. We’ll go over the general breakdown here, but if you want more details, hop on over to our step-by-step guide.
- First, calculate gross wages. If your employee is being paid hourly, simply multiply the number of hours worked during the pay period by the hourly rate. For salaried employees, take their annual salary and divide it by the number of pay periods. Don’t forget about bonuses, commissions, and tips. They all go into gross wages.
- Then, deduct pre-tax withholdings. Some of your employees might choose to participate in 401(k), HSA, FSA, or other eligible benefits. They are subtracted from gross wages before income taxes are taken out.
- Deduct out Federal income taxes. The big enchilada. It’s the largest tax that your employees will pay. The tax rates vary based on income and can range from 0% all the way up to 37%. Click here to read all you need to know about deducting the right amount of federal income taxes.
- Deduct FICA taxes. FICA stands for Federal Insurance Contributions Act, and it was first introduced all the way back in 1935. There are 2 FICA taxes. The first is Social Security tax, which is 6.2% of the first $160,200 of taxable wages per year. Any wages above $160,200 is not taxed. As the employer, you also have to pay this tax. You have to match your employees’ contributions dollar-for-dollar. The second is Medicare tax, which is 1.45% of the first $200,000 of taxable wages per year. After that, the rate jumps up to 2.35%. The 0.9% bump is called the Additional Medicare Tax (obviously). As the employer, you must match the first 1.45% of your employees’ contributions, but you’re exempt from the Additional Medicare Tax.
- Pay FUTA taxes. Your employees get to sit this one out. Only employers are responsible for paying federal unemployment taxes, which are 6% of the first $7,000 of each employee’s taxable income for the year. However, there’s one huge caveat that can reduce your FUTA tax liabilities by a whopping 90%. If you pay your taxes in full and on time each quarter, you are eligible for a tax credit of up to 5.4%. But it all depends on which state you do your business in. Watch this nifty IRS video for more details.
- Finally, deduct post-tax withholdings. After you’ve deducted all the proper taxes, there’s just one more thing you have to look out for. Some of your employees may be levied wage garnishments or child support, so watch out for a letter from the court that may show up at your office.
All federal tax filings are due quarterly. Employers must complete the IRS Form 941 along with paying the payroll taxes. FUTA unemployment taxes must also be paid quarterly, but you only have the fill out the IRS Form 940 at the end of the year. Or, if you’d rather pay on an ongoing basis, you can use the EFTPS payment system.
All the employment tax filing due dates can be found here.
2023 Virginia (VA) state payroll taxes
With four marginal tax brackets based upon taxable income, payroll taxes in Virginia are progressive. Tax rates range from 2.0% – 5.75%. Since the top tax bracket begins at just $17,000 in taxable income per year, most Virginia taxpayers will pay the top rate.
The good news is that location doesn’t matter, so there’s no need to worry about local taxes.
Virginia state unemployment tax
- Virginia has State Unemployment Insurance (SUI), which ranges from 0.1% to 6.2%.
- The wage base for SUI is $8,000 of each employee’s taxable income. If you’re a new employer, your rate will be between 2.5% and 6.43%.
- If you’re a foreign contractor doing business in Virginia, your UI rate is 6.43% for a minimum of three calendar years.
As you can see, Virginia SUI can be complicated, so if you have any questions, check out the FAQ section of the Virginia Employment Commission website.
Now write those paychecks!
The first step to doing big things with your small business is paying your employees. And now it’s time to cut those checks. As if you don’t have enough responsibility already, make sure you keep your portion of the FICA and FUTA payments in mind. Those contributions can add up come tax season if you don’t remit them regularly.
Do you have employees nearby too? These might be helpful.
Additional VA payroll tax resources:
Here are a few additional resources that we think will help you. Take a look now and thank us later.
Tax Filing & Registration with the Virginia Employment Commission
Withholding Tax information from Virginia Tax
Income Tax Withholding Guide For Employers with the Virginia Department of Taxation
These rates are based on local legislation and can change at any time. Always consult a tax professional if you are unsure about your obligations.
More helpful payroll calculators
Virginia employers can calculate gross pay, net pay, and deductions in just a few clicks with the calculator at the top of this page (and feel confident when cutting paychecks). But occasionally, companies have situations that require a bit more number crunching. For instance, do you sometimes reward high-performing employees with bonuses? Remember that these payments are considered supplemental wages in the eyes of the IRS, and, therefore, subject to tax withholding. Furthermore, as employees come and go, you may need to figure out what their final paychecks will be. So, if you can use a little more help managing the math, check out some of the calculators listed below.